Project Presentation Guidelines
For multinational businesses, transaction exposure can cause the devaluing of a contract due in a later time period and change the overall profit or loss of a project. Create a presentation to incorporate the knowledge gained and information presented in the previous research, interview, and milestones to explain how a company may break into global enterprise by gaining a new contract, whether the organizational structure and business objective play a part in the company's entrance to international trade, how transaction and other exposures play a part in the success or failure, types of domestic and international financing options for the business or project, and the changes or effects of the balance of payments and trade balance between the two countries and how each may cause fluctuations of interest rates, exchange rates, and the overall cost of the venture. Include an example of purchasing power parity, types of possible arbitrage, and how this company will decide if the potential profits are worth the risks.
Keep in mind that this is your final project for this course. It should include all concepts covered in this course, extreme detail about historical trade between China and the United States, and your opinion of what the future may hold between these two countries. Utilize as many details as possible into this project, but do not copy the same information previously submitted in the course.
The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions.
The final presentation should be a minimum of 10-12 slides in Prezi, video, or other tool, including a title slide and reference slide. The APA style format must be used when citing and referencing information provided. Provide your name, course number, a title to the paper, and headers and footers where applicable.
Course Outcomes
In this assignment, you will demonstrate your mastery of the following course outcomes:
1. Recognize the objectives, risks, and expansion opportunities of multinational corporations
2. Analyze the tools used for direct and indirect intervention of the foreign exchange market in regard to fluctuating exchange rates
3. Identify the use of a financial intermediary when utilizing forward contracts, cross exchange rates, swap rates, currency, Euro Credit, and Eurobonds
4. Assess changes in exchange rates, the effect on an import-dependent country, and how they may be used as an adjustment tool
5. Explain the difference between transaction and translation exposure
6. Examine the effective interest rates effect when financing international trade (methods of payment, factoring, short-term bank loans, banker's acceptance, forfeiting, countertrade)
7. Evaluate the cost of capital for multinational corporations and how costs may change or validate the selection of investment projects
Milestones
Milestone One: Balance of Trade
This milestone is submitted in Module Two. Specifically address the following questions:
1. Explain how trade balance, interest rates, and exchange rates are related, and cite an example of how a rise or fall in one changes the others.
2. Does a deficit in China or the United States change the overall advantage or disadvantage of trade? Why?
3. Explore how the cost and quantity of imports and exports, such as electronic equipment, may be challenged by the rise and fall of these rates.
4. Incorporate the fluctuations of supply and demand into the costs incurred and decide ways management calculates estimations for further product needs.
5. Explain the philosophy of "international crowding out," citing an example of how this may occur, and describe how excessive borrowing in one country has affected interest rates in the United States.
As an example, China and the United States "borrow" from each other to finance needs by purchasing government-backed securities from the other country. This practice provides one country with additional funds and also gives the purchasing country more control over interest rates or "borrowing costs" in the future. How does these influence interest rates in the domestic country and foreign country?
Can one country gain control over another financially by continually financing another country's debt?
This paper should be a minimum of 2 pages in length in addition to the title and reference pages. The APA style format must be used when citing and referencing information provided. Provide your name, course number, a title to the paper, and headers and footers where applicable. This milestone is graded with the Milestone One. (You don't have to do this part, just general information).
Milestone Two: Arbitrage
The law of one price and purchasing power parity ensure that even though exchange rates may fluctuate, a consumer will pay the same price for an item or basket of goods no matter which currency is used in a particular country. At times, an individual or business will take advantage of exchange rates to gain more value or wealth from international trade; this is called arbitrage.
1. Write a paper expanding the explanation of these two theories, utilizing and comparing goods purchased in China with yuan and those same goods purchased in the United States with dollars. Incorporate research to fully describe purchasing power parity and the law of one price.
2. Provide an example and explanation of how the possibility of arbitrage may be related to both of these concepts.
3. Explain the differences between covered interest arbitrage, intermarket arbitrage, and triangular arbitrage, and how the cycle of investments and cross rates played a part.
4. What is your opinion of this type of arbitrage as it relates to foreign exchange-is this unethical behavior or merely an investment strategy?
This paper should be a minimum of 2 pages in length in addition to the title and reference pages. The APA style format must be used when citing and referencing information provided. Provide your name, course number, a title to the paper, and headers and footers where applicable. This milestone is graded with the Milestone Two. (You don't have to do this part, just general information).
Milestone Three: Currency Market Intervention
In this module, we are investigating why governments try to intervene in the currency market to keep values of their own currency low. This practice is used to promote the sale of goods to other countries and create additional exports. Here, the purchasing company views the lower value of the foreign currency as a bargain for purchasing goods because the lesser value purchases a larger quantity.
1. In expanding the research and knowledge of the ongoing relationship between the United States and China, write a paper to summarize currency market intervention and decide whether this is a useful tool. Explain your rationale.
2. Cite an example of how intervention has been used to benefit either of these countries and the circumstances surrounding this intervention. Did the United States or China succeed in their efforts? How is this known? Overall, do you believe this was a beneficial choice for the government and country? What data is your opinion based upon?
This paper should be a minimum of 2 pages in length in addition to the title and reference pages. The APA style format must be used when citing and referencing information provided. Provide your name, course number, a title to the paper, and headers and footers where applicable. This milestone is graded with the Milestone Three. (You don't have to do this part, just general information).
Final Presentation
Create a presentation to incorporate the knowledge gained and information presented in the previous research, interview, and milestones to explain how a company may break into global enterprise by gaining a new contract, whether the organizational structure and business objective play a part in the company's entrance to international trade, how transaction and other exposures play a part in the success or failure, types of domestic and international financing options for the business or project, and the changes or effects of the balance of payments and trade balance between the two countries and how each may cause fluctuations of interest rates, exchange rates, and the overall cost of the venture. Include an example of purchasing power parity, types of possible arbitrage, and how this company will decide if the potential profits are worth the risks.
Keep in mind that this is your final project for this course. It should include all concepts covered in this course, extreme detail about historical trade between China and the United States, and your opinion of what the future may hold between these two countries. Utilize as many details as possible into this project, but do not copy the same information previously submitted. This submission is graded with the Final Presentation.
Final Presentation
The final presentation should be a minimum of 10-12 slides in Prezi, video, or other tool, including a title slide and reference slide. The APA style format must be used when citing and referencing information provided.